The risky market environment at the opening of trading earlier this week has seen the re-strengthening of the US dollar which also pressured the gold commodity to experience depreciation.
Being a driver of risk-off sentiment, developments in China worsened when it was reported that protests by Chinese residents lasted for 3 days caused by a fire incident in a residential location resulting in 10 people being killed.
The people are believed to be furious because the movement restriction measures implemented are the cause of preventing the rescue efforts of the victims.
After moving gloomy last week, the US dollar began to show dominance again in the New York session yesterday, supported by hawkish statements by some members of the Federal Reserve (Fed) on monetary policy.
The XAU/USD price chart which measures the value of gold against the US dollar saw the 1760.00 resistance zone again tested yesterday as gains took place in the European session.
However, still failing to break through the zone like last week's situation, the price then plunged in the following session until reaching around 1740.00.
In fact, the price has also dropped below the Moving Average 50 (MA50) barrier level on the 1-hour time frame of the price movement on the XAU/USD chart to signal the start of a bearish trend.
Today (Tuesday), prices are seen to make an increase in the Asian session testing the MA50 barrier and the 1760.00 zone is also expected to be tested while developments in China continue to be monitored by the market.
If further decline continues, the price is expected to pass the current support zone at 1740.00 before the RBS (resistance becomes support) zone at 1720.00 will be the focus to be tested.
The next decline is seen to be towards the 1700.00 zone for the continued bearish trend movement.
However, if the increase made today succeeds in breaking through the resistance of 1760.00, gold investors will be more optimistic to place the expectation of a more positive increase will be exhibited.
The previous resistance zone of 1785.00 will be the target again to be reached before the price that manages to break it will record the latest high at the expected 1800.00.
